Michigan "right-to-work" law exempts existing union contracts

LANSING, Michigan (Reuters) - The proposed Michigan "right-to-work" law will not apply to existing union contracts, a leading sponsor of the proposal said on Friday, which may blunt its immediate impact on the state's huge auto industry.

Michigan Republicans pushed through the state Legislature on Thursday a law making the payment of union dues voluntary in the private sector. The state Senate also voted to apply that to the public sector, except for police and fire unions.

Republican lawmakers, who hold majorities in both chambers of the Legislature, could give final approval to the laws on Tuesday, and Republican Governor Rick Snyder could immediately sign them, Amber McCann, spokeswoman for state Senate Majority Leader Randy Richardville, said on Friday.

"Right-to-work" could be signed into law within a week in the cradle of the U.S. auto industry, a stunning blow to organized labor in the United States.

The law would actually take effect at the end of March, Richardville said on Thursday.

But the legislation has a "grandfather" clause exempting existing union contracts until they expire, said Republican state Senator Arlan Meekhof, a sponsor of the plan.

"Those people who agreed to a contract should be allowed to retain the rights they had when they made the agreement," Meekhof said in an interview.

Major automakers General Motors Co, Ford Motor Co., and Chrysler signed a four-year contract with the United Auto Workers that runs until September 14, 2015, a spokeswoman for GM said.

"They can continue to operate just as they are until the next contract," said Bob Clark, a labor relations consultant and former Ford labor economist, who based his interpretation on the wording of the draft law.

The whirlwind action left companies and unions alike scrambling to assess a future where union membership is voluntary in Michigan.

UAW President Bob King said he would work with other unions to build support to overturn the measures at the ballot box through a referendum. Democrats and unions are also certain to challenge the laws in court and could try to recall some Republicans who voted for it, political sources said.

Opponents said they planned more demonstrations next week, after eight people were arrested and at least two were hit with pepper spray on Thursday during protests at the state Capitol.

The protests recalled the bitter two-year battle in neighboring Wisconsin over curbs on public-sector unions that culminated in an unsuccessful effort to recall Republican Governor Scott Walker.

'A LONG FIGHT'

Opponents say "right-to-work" laws amount to "union busting" because they make union membership and paying dues voluntary, an indirect attack on organizations that typically provide financial support for Democrats.

Supporters say they help lure more business and give individual workers a choice of whether to join a union.

"This is just the beginning of what will be a long fight regarding unions in Michigan," said Kristin Dziczek, director of labor and industry at the Center for Automotive Research.

Michigan would be the second state in the industrial U.S. heartland to adopt such a law, after Indiana earlier in 2012. Most of the other states are in the South.

Michigan had the fifth highest percentage of unionized workers in the country at 17.5 percent in 2011, according to the U.S. Bureau of Labor Statistics.

There are 698 auto assembly, auto parts or supplier manufacturing plants in Michigan, more than any other state, according to Elm Analytics, which tracks data on the industry.

Some 138,200 people were employed in motor vehicles and parts manufacturing in Michigan as of October, or 18 percent of the national total, according to latest U.S. government figures.

Automakers have won major concessions from workers in the last two labor contracts in 2007 and 2011. Those deals went some way to evening out labor costs between unionized domestic automakers and foreign companies that set up mainly in non-union "right-to-work" states of the South, said Arthur Schwartz, president of Labor and Economics Associates and a former GM labor affairs official.

"From their (domestic automakers) point of view, they've got a good thing going," said Dale Belman of the School of Labor and Industrial Relations at Michigan State University.

"I don't think this will hurt the UAW with the (Detroit automakers) as much as it will hurt unions trying to organize nonunion companies in Michigan," Schwartz said.

(Additional reporting by David Bailey in Minneapolis, Deepa Seetharaman and Ben Klayman in Detroit; Writing by Greg McCune; Editing by Peter Cooney)

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